January: -0.8% m/m, +2.6% y/y (revised from +2.7%)
December: +0.3% m/m, +2.7% y/y
November: +0.1% m/m, +3.0% y/y
October: +0.3% m/m, +3.0% y/y
September: +0.8% m/m, +3.0% y/y
—

FRANKFURT (MNI) – Eurozone consumer price inflation was revised
down to +2.6% in January, its lowest annual rate since last summer,
while the core rate slipped to five-month lows, Eurostat reported on
Wednesday.

On the month, consumer prices were down 0.8%, as cheaper clothing
and leisure offset costlier energy and food.

Energy components continued to have the strongest impact on overall
CPI, as evidenced by the 0.33 percentage point contribution to the
monthly rate and the 0.67 percentage point boost to the annual figure.
Energy prices as a whole were up 2.6% on the month, yielding an annual
rate of 9.2%

Food prices rose 0.4% from December to January, lifting the annual
rate to 2.9%. On the month, alcohol and tobacco were 0.6% more
expensive, leaving the annual change at +3.8%.

Excluding those components, the core index fell 1.7% on the month
to give an annual rate of +1.5%, its lowest level since August. The
European Central Bank’s preferred measure of core inflation, which
filters out the effects of energy and unprocessed food prices, was 1.4%
lower on the month to give a y/y change of +1.9%, also the lowest since
August.

While favourable base effects and slowing activity are widely
expected to lead to a slowdown in inflation in the coming months,
costlier energy poses upside risks for the near term. A European
Commission poll showed selling price expectations rising in industry
while remaining above the long-run average in all sectors except
construction.

Nevertheless, companies’ ability to pass on costs to clients
remains limited for the time being. Firms polled in February’s PMI
reported a drop in prices charged for the third consecutive month, as
cheaper services offset the “moderate” rise in manufacturing.

An above-average — albeit declining — proportion of consumers
also expect prices to trend higher over the next 12 months, the
Commission’s survey showed.

Analysts polled by the ECB in January revised upward their
projection for average annual inflation this year by 0.1 point to 1.9%,
but they revised down the forecast for next year by 0.1 point to +1.7%.

“Based on the individual probability distributions, the balance of
risks to the shorter-term point forecasts is assessed to be on the
downside for 2012 and broadly balanced for 2013,” the ECB said.

In Germany, prices were down 0.5% to give an annual rate of 2.3%,
unchanged from December. French consumer prices slipped 0.4% on the
month, reducing the y/y figure by 0.1 percentage point to +2.6%.

Italian HICP plummeted 1.8% m/m, reducing the annual rate to +3.4%
from December’s +3.7%, while consumer prices in Spain fell 1.7% from
December and slowed 0.4 percentage point to +2.0% on the year.

Outside of the larger Eurozone economies, the highest price jumps
were noted in Slovakia and Estonia (both +4.1% y/y), followed by
Portugal (+3.4%) and Luxembourg (+3.2%).

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

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